BRRRR Investing When Rates are Low

[Sam DeZeeuw]

Hi there!

Im brand new to real estate investing. But am very ready to start my journey. I love the BRRRR method and want to pursue that form of investing.

However, something I'm concerned about (and maybe I shouldn't be) is the Refinance part in today's economy.

Today rates are very low. So if I were to find a great price on a house today and get a 3% rate on it. I'm worried, by the time I'm ready to do a Cash Out Refinance to buy more properties, rates will be higher again, like 4%+.

Is this something anyone else is concerned about? Or is it something that you prepare for when you set your rental prices to make sure the rent is enough to cover the future increased mortgage payment?

I certainly don't want to be stopped by feat to get started. So I appreciate your guys experience and feedback!

[Tyrone Osilesi]

Typically with the BRRRR method, you're buying a distressed property "AS-IS" with cash and are only financing it with a lender once after you've completed its rehab and allowed for some forced appreciation. I guess you could find a lender to finance a distressed property and essentially buy it twice though.

You'd definitely want to make sure rents in the area can support and pay for your new mortgage based on its ARV allowing for capex, property managers, vacancy, etc. and still cash flow.

I don’t think any of us can predict the future with respect to interest rates and what the market will do. Best we can do is get as much data as possible to assess a deal, get solid about your numbers, and strike if it makes sense for you. Good luck!